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Canada Incurs Record $14 Billion Automotive Trade Deficit in 2008, Now in Deficit within North America, CAW Reports

TORONTO, Feb. 16 /CNW/ - Data newly released from Statistics Canada
confirms that Canada experienced its worst-ever year in international trade in
automotive products in 2008, according to an analysis from the Canadian Auto
Workers union.
Canada's automotive trade deficit more than doubled last year, to almost
$14 billion - an all-time record. The 2007 deficit was $6.6 billion.
Canada's exports of finished vehicles declined dramatically (by almost
one quarter) as a result of the financial crisis and resulting collapse of
U.S. auto sales. Imports of auto parts (which are used in Canadian auto
factories) also declined. But imports of finished vehicles from offshore grew
again (for the fifth straight year), despite the economic crisis.
The aggregate data reveal several worrying trends. For the first time in
decades Canada experienced a net auto trade deficit within North America.
Canada's traditional auto trade surplus with the U.S. plunged to just $4
billion (barely one-fifth the level of three years ago). That surplus with the
U.S. no longer offsets Canada's long-standing auto trade deficit with Mexico
(which equaled $4.5 billion last year), leaving a small combined deficit for
the NAFTA region as a whole.
Canada's auto trade with offshore (non-NAFTA) producers remains very
unbalanced as well. Canada's automotive exports to countries outside of NAFTA
plunged 30 per cent last year (to just over $1 billion). However, despite
slowing auto sales in Canada, auto imports from outside of NAFTA continued
their steady growth, reaching a record $15 billion. Those imports have doubled
in the past decade. For every dollar of automotive imports that Canada accepts
from outside of NAFTA, Canada exports just seven cents back in the other
direction. Since Canada no longer can rely on a trade surplus within the North
American market to offset this offshore deficit, Canada's overall trade
deficit has widened dramatically.
"This data confirms that Canada's unbalanced trade with Asia and Europe
is a major cause of the industrial carnage we see around us today," said CAW
President Ken Lewenza, reacting to the new data.
The collapse of Canada's automotive trade position has contributed
substantially to the deterioration in Canada's overall merchandise trade
balance. Aggregate statistics released last week confirmed that Canada slipped
into an overall trade deficit in December for the first time since 1976.
"For years we tolerated a growing offshore imbalance, because our strong
position in the U.S. market bailed us out," Lewenza said. "But clearly we
can't count on the U.S. market to prop up our trade numbers anymore, which
makes it all the more essential to address those trade imbalances with the
rest of the world."
"For years we have relied on exports of petroleum and other resources to
subsidize a growing manufacturing trade deficit, but this is no longer
possible either," Lewenza added. "Our collapsing performance in autos and
other manufactured goods now translates into a bottom-line trade deficit."
Lewenza reiterated the CAW's position that the federal government must
address the growing auto trade imbalance as part of a broader national auto
strategy. The CAW has made its willingness to engage in contract
renegotiations with the Detroit Three automakers conditional on the
implementation of a national auto strategy.
The CAW estimates that the $14 billion automotive trade deficit in 2008
corresponds to the loss of 22,500 direct auto jobs (based on the average job
intensity of automotive shipments).
"Because of this trade deficit, Canada now has far less than its share of
auto jobs, even within North America. Canadians deserve to have a proportional
share of good jobs, and implementing a national auto strategy is a
pre-requisite for stabilizing and rebuilding the industry," said Lewenza.
A detailed table summarizing the 2008 auto trade data is available at:
http://www.caw.ca/en/sectors-auto-vehicle-manufacturing-industry.htm